Angels Out of America

How the Dodd bill harms start-ups.

Senator Chris Dodd's 1,400-page financial reform bill contains many economic land mines, and here's one of the worst: Provisions that would make it harder for business start-ups to raise seed capital.

Currently, wealthy individuals who want to invest directly in a new business can do so with minimum interference from regulators. The law requires only that the investor be "accredited" by meeting thresholds for net worth ($1 million) or income ($250,000). Entrepreneurs depend on these "angel" investors,...